My Ph.D. thesis contains three Chapters: Reputation with Endogenous
Monitoring, Strategic Communication in Networked Organizations
and Information Technology, Decision Making and Incentives. In
each of them I use different theoretical techniques to understaMy Ph.D. thesis contains three Chapters: Reputation with Endogenous
Monitoring, Strategic Communication in Networked Organizations
and Information Technology, Decision Making and Incentives. In
each of them I use different theoretical techniques to understand how
firms, organizations and other institutions aggregate the information
acquired by their member in order to make appropriate decisions.
In the first Chapter, Reputation with Endogenous Monitoring, I analyze
the strategic interaction between an uninformed decision-maker
and an informed expert. The expert may have a conflict of interest
with the decision-maker, but this is his private information. The decision-maker is allowed to verify the recommendation of the expert, but this is costly. Assuming that these two individuals interact
repeatedly over time, I study the incentives of the decision-maker to
verify the recommendation depending on her time horizon. I show
that if the decision-maker is patient and sufficiently pessimistic about
the preferences of the agent, she will verify with less probability in
any Markov Perfect Equilibrium as compared with the case in which
she is myopic. I also show that, due to a lack of commitment, the
principal could increase his payoff by delegating to a myopic one.
Finally, I relate this theoretical findings with the empirical evidence
from the banking industry.
In the second Chapter, Strategic Communication in Networked Organizations
I analyze organizations comprised of a finite number of
individuals, each of whom must take a single decision. Their payoff
depends both on their coordination and on the realization of a random
variable over which they only observe a noisy signal. I allow
them to send messages to other individuals through an undirected
network. I show that the need for coordination and the use of partial
information difficulties communication even if there is no intrinsic
conflict in preferences. I characterize the set of networks that guarantee
efficient information transmission, and show that they imply
that the ex-post distribution of information is very equal. Otherwise,
the communication process will add noise and hamper the quality
of the decisions made and the degree of coordination across individuals.
I also show that, under some conditions, these networks can
be rationalized as the outcome of a (larger) game in which the individuals
do also decide how much information to acquire. The main
insight of the paper is that in organizations relying on decentralized
decision-making hierarchies and other networks generating unequal
information distributions create biases and noises in communication,
and therefore, inefficiencies in decision making. This result is in sharp
contrast with the literature on non-strategic communication in organizations.
Finally, in the third Chapter, Information Technology, Decision Making
and Incentives I study the behavior of a multi-unit organization
where the Headquarters must take a common decision, based on the
information transmitted by each unit. The information transmission
process takes the form of a signalling game. I analyze the optimal information
structure that the Headquarters would choose in order to
balance the trade-off between improved decisions from better information
and worse incentives. I show that this information structure
will depend on the volatility of the environment and the need for coordination,
but it will never be the case that the Headquarters want
to know perfectly the amount of effort that each local unit makes.
I relate these findings to the organizational form and the empirical evidence on the value of the investments in Information and Communication
Technologies.[+][-]